A. No. The EITC, also known as the EIC, which was enacted by Congress in 1975 to help low-income workers, has not gone away. But the AEITC has.
A. The Advanced Earned Income Tax Credit program was designed to give qualified employees a tax credit that was distributed throughout the year in their paychecks. This option has gone away as of Dec. 31, 2010.
A. The law changed. Workers didn’t take advantage of the advance option as much as the government had hoped. The Education Jobs and Medicaid Assistance Act of 2010 repealed the AEITC, and it became unavailable to workers in 2011.
A. As an employer, you are are no longer part of the equation for your employees’ EITC. You no longer will calculate the tax credit in your employee payroll. Your payroll provider should have already updated their payroll software and forms to prepare for this change.You no longer need to give employees Form W-5 (Earned Income Credit Advance Payment Certificate); that form has been eliminated. However, you still must notify employees that they may be eligible to receive the earned income credit. (To find out if your employees are eligible, read Notice 1015: Have You Told Your Employees About the Earned Income Credit?)
You can satisfy the EITC notification requirement when you give employees their Form W-2 (required information is on the back of Copy B), or give them Form 797.
For more information, read our previous article on the earned income tax credit.